Bitcoin Senate hearing preview

Bitcoin and other digital currencies will get to make their voices heard before a Senate committee hearing November 18 in Washington.

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Bitcoin Senate hearing preview

Bitcoin and other digital currencies will get to make their voices heard before a Senate committee hearing November 18 in Washington.

The Senate Committee on Homeland Security and Governmental Affairs called a hearing to learn more about Bitcoin and what it calls “virtual currencies.” Five government agencies will send their representatives to offer perspective.

Representing the digital currency economies will be Patrick Murck, from the Bitcoin Foundation; Jeremy Allaire, CEO of Bitcoin startup Circle; and Jerry Brito, a Bitcoin researcher from George Mason University.

Brito himself makes the case that US regulations are already hamstringing Bitcoin’s growth.

This past spring, FinCEN said that any Bitcoin exchanges that allow customers to exchange BTC for USD have to register with the government and become compliant with money laundering rules.

This is something any financial institution should have to do, FinCEN director Jennifer Shasky Calvery stated in written testimony.

“Any financial institution could be exploited for money laundering purposes,” she wrote. “What is important is for institutions to put controls in place to deal with those money laundering threats.”

Homeland Security’s position is that the government must remain vigilant against criminal organization that could use cryptocurrencies to launder money and move it across borders.

A fair degree of anonymity is also available to Bitcoin users, criminal and law-abiding alike.

But organized crime has thus far been a big part of the Bitcoin narrative. In August, police arrested Freedom Hosting’s operator. That service provided servers for websites that hosted child pornography, and the FBI called the services “the largest facilitator of child pornography on the planet.”

From the position of law enforcement, the anonymity provided by digital currencies is at issue, not the currency itself.

In prepared testimony, Ernie Allen, of the International Centre for Missing & Exploited Children, conceded that digital currency allows for much more liquidity and convenience, and this could be a real boon to those who do not have access to banks or credit cards.

But anonymity makes these currencies a double-edged sword.

“The attractiveness of Tor and Bitcoin for child pornography is based upon a perception of anonymity,” he wrote. “If the perception of anonymity diminishes, we believe the criminal use will diminish with it.”

Bitcoin meanwhile has been making record gains this month amid media and government curiosity. The cycle of surging value and surging interest only seems likely to continue.

 

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